Economy of Thailand

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The economy of Thailand is export-dependent, with exports accounting for 60% of GDP. The exchange rate has reached 37.00/usd (GDP $7.3 trln baht) as of October 26, 2006, for a nominal GDP at market rates of approximately US$ 200 bln. This keeps Thailand as the 2nd largest economy in Southeast Asia, after Indonesia, a position it has held for many years. Thailand's recovery from the 1997-98 Asian financial crisis relied on exports, largely on external demand from the United States and other foreign markets. The Thaksin government took office in February 2001 with the intention of stimulating domestic demand and reducing Thailand's reliance on foreign trade and investment. Since then, the Thaksin administration has refined its economic message, embracing a "dual track" economic policy that combines domestic stimulus with Thailand's traditional promotion of open markets and foreign investment. This set of policies are popularly known as Thaksinomics. Weak export demand held 2001 GDP growth to 1.9%. In 2002-3, however, domestic stimulus and export revival fuelled a better performance, with real GDP growth at 5.3% and 6.3% respectively.

[edit] Macro-economic trend

This is a chart of trend of gross domestic product of Thailand at market prices estimatedby the International Monetary Fund with figures in millions of Thai Baht.

For purchasing power parity comparisons, the US Dollar is exchanged at 12.34 Baht only.

Before the financial crisis, the Thai economy had years of manufacturing-led economic growth--averaging 9.4% for the decade up to 1996. Relatively abundant and inexpensive labour and natural resources, fiscal conservatism, open foreign investment policies, and encouragement of the private sector underlay the economic success in the years up to 1997. The economy is essentially a free enterprise system. Certain services, such as power generation, transportation, and communications, are state-owned and operated, but the government is considering privatizing them in the wake of the financial crisis.

The Royal Thai Government welcomes foreign investment, and investors who are willing to meet certain requirements can apply for special investment privileges through the Board of Investment. To attract additional foreign investment, the government has modified its investment regulations.

The organized labour movement remains weak and divided in Thailand; only 3% of the work force is unionized. In 2000, the State Enterprise Labour Relations Act (SELRA) was passed, giving public sector employees similar rights to those of private sector workers, including the right to unionize.

Roughly 60% of Thailand's labour force is employed in agriculture.^{[citation needed]} Rice is the country's most important crop; Thailand is a major exporter in the world rice market. Other agricultural commodities produced in significant amounts include fish and fishery products, tapioca, rubber, grain, and sugar. Exports of processed foods such as canned tuna, pineapples, and frozen shrimp are on the rise.

Thailand's increasingly diversified manufacturing sector made the largest contribution to growth during the economic boom. Industries registering rapid increases in production included computers and electronics, garments and footwear, furniture, wood products, canned food, toys, plastic products, gems, and jewelry. High-technology products such as integrated circuits and parts, electrical appliances, and vehicles are now leading Thailand's strong growth in exports.

[edit] Trade

The United States is Thailand's largest export market and second-largest supplier after Japan. While Thailand's traditional major markets have been North America, Japan, and Europe, economic recovery among Thailand's regional trading partners has helped Thai export growth (5.8% in 2002). Recovery from the financial crisis depended heavily on increased exports to the rest of Asia and the United States. Since 2005, the rapid ramp-up in export of automobiles of Japanese makes (esp. Toyota, Nissan, Isuzu) has helped to dramatically improve the trade balance, with over 1 million cars produced last year. As such, Thailand has joined the ranks of the world's top ten automobile exporting nations.

Machinery and parts, vehicles, electronic integrated circuits, chemicals, crude oil and fuels, and iron and steel are among Thailand's principal imports. The recent increase in import levels (4.6% in 2002) reflects the need to fuel the production of high-technology items and vehicles.

Thailand is a member of the World Trade Organization (WTO) and the Cairns Group of agricultural exporters. Thailand is part of the ASEAN Free Trade Area (AFTA). Thailand has actively pursued free trade agreements. A China-Thailand Free Trade Agreement (FTA) commenced in October 2003. This agreement was limited to agricultural products, with more comprehensive FTA to be agreed by 2010. Thailand also has a limited Free Trade Agreement with India, which commenced in 2003; and a comprehensive Australia-Thailand Free Trade Agreement which started 1 January 2005. Thailand started free trade negotiations with Japan in February 2004, and an in-principle agreement was agreed in September 2005. Negotiations for a US-Thailand Free Trade Agreement are underway, with the fifth round of meetings held in November 2005.

Tourism contributes significantly to the Thai economy, and the industry has benefited from the Thai baht's depreciation and Thailand's stability. Tourist arrivals in 2002 (10.9 million) reflected a 7.3% increase from the previous year (10.1 million).

Bangkok and its environs are the most prosperous part of Thailand, and the infertile northeast is the poorest. An overriding concern of successive Thai Governments, and a particularly strong focus of the recently ousted Thaksin government, has been to reduce these regional income differentials, which have been exacerbated by rapid economic growth in and around Bangkok and the financial crisis. The government is trying to stimulate provincial economic growth with programs such as the Eastern Seaboard project and the development of an alternate deep-sea port on Thailand's southern peninsula. It also is conducting discussions with Malaysia to focus on economic development along the Thai-Malaysian border.

Although the economy has demonstrated moderate positive growth since 1999, future performance depends on continued reform of the financial sector, corporate debt restructuring, attracting foreign investment, and increasing exports. Telecommunications, roadways, electricity generation, and ports showed increasing strain during the period of sustained economic growth and may pose a future challenge. Thailand's growing shortage of engineers and skilled technical personnel may limit its future technological creativity and productivity.

[edit] Other statistics

Investment (gross fixed): 28.7% of GDP (2006 est.)

Household income or consumption by percentage share:

• lowest 10%: 2.8%
• highest 10%: 32.4% (1998)

Distribution of family income - Gini index: 51.1 (2002)

Agriculture - products: rice, cassava (tapioca), rubber, corn, sugarcane, coconuts, soybeans

Industries: tourism, textiles and garments, agricultural processing, beverages, tobacco, cement, light manufacturing such as jewelry, electric appliances and components, computers and parts, integrated circuits, furniture, plastics, world's second-largest tungsten producer, and third-largest tin producer

Industrial production growth rate: 6% (2006 est.)

Electricity:

• production: 121.7 billion kWh (2004)
• consumption: 116.2 billion kWh (2004)
• exports: 372 million kWh (2004)
• imports: 3.388 billion kWh (2004)

Electricity - production by source:

• fossil fuel: 91.3%
• hydro: 6.4%
• other: 2.4% (2001)
• nuclear: 0%

Oil:

• production: 230,000 barrels per day (35,800 m³/d) (2005 est.)
• consumption: 785,000 barrels per day (125,000 m³/d) (2001 est.)
• exports: NA
• imports: NA
• proved reserves: 583 million barrels (95,000,000 m³) (November 2003)

Natural gas:

• production: 22,280,000,000 m³ (2003 est.)
• consumption: 29,150,000,000 m³ (2003 est.)
• exports: 0 m³ (2001 est.)
• imports: 5,200,000,000 m³; (2001 est.)
• proved reserves: 377,700,000,000 m³ (November 2003)

Current account balance: $-5.901 billion (2005 est.)

Exports - commodities: textiles and footwear, fishery products, rice, rubber, jewelry, automobiles, computers and electrical appliances lex Imports - commodities: capital goods, intermediate goods and raw materials, consumer goods, fuels

Reserves of foreign exchange and gold: $51.9 billion (2005)

Exchange rates: baht per US dollar - 40.5348 (2004), 41.4846 (2003), 42.9601 (2002), 44.4319 (2001), 40.1118 (2000)

[edit] See also

• Stock Exchange of Thailand
• List of economic geography topics

[edit] External links

• http://www.bot.or.th/ - Bank of Thailand

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